Choosing a financial institution to handle your money is an incredibly important financial decision. Where you store your money acts as a basis for all of your financials, as you are reliant on this institution to care for your money according to your needs. National banks, regional banks, credit unions, and online banks all offer differing services, rates, and fees. These differences may be confusing or simply overwhelming, and your financial needs shift throughout life. It’s always beneficial to shop the market of financial institutions, so how do you find a bank that fits you?

The first step to choosing a financial institution that best fits your needs is to establish what kind of account you’re looking for. The basic account types are checking and savings, but there are also certificates of deposit accounts (CDs) and money market accounts. Each account type has a specific purpose and role within personal finance, with most of the difference being about spending or saving.

·      Checking accounts: These accounts are used for everyday spending needs. They typically have a debit card associated with the account and ATM access for ease of accessing the money within the account. This is typically used for withdrawals rather than deposits, meaning more money typically goes out rather than in. It’s better to keep a lower balance in these accounts since there is no interest accrued on the money within the account.

·      Savings accounts: These accounts are used for short-term saving and garnering interest. This is where you would put leftover money at the end of the month for a rainy day later on. Typically, these accounts have an interest rate, which adds a small amount of money to your account each month based on your balance in the account. You can basically get a very small amount of free money each month. The more you deposit, the bigger your interest return will be. There is typically no card associated with these accounts, and access to the money within the account differs between institutions. Consider money less accessible than a checking account.

·      Certificates of deposit: A certificate of deposit is a sum of money that is locked in an account for a specific amount of time with fixed interest. CDs are good for larger savings/purposes, but you want to make sure that you will not need to access this money, as if you break the time there is often a fee associated. The common lock time for CDs is five years. They act as a good way to make a lasting relationship with a financial institution and allow you to save a sum of money with a specific purpose rather than general savings. People often use CDs for larger purposes like businesses, houses, cars, etc.

·      Money market account: These accounts act like savings accounts but with more withdrawal options. It’s kind of like the midpoint between checking and savings, with a debit card and ATM service and interest. They may limit the transactions within the account, but these limits are typically higher than that of a savings account. Think of it as a savings account with greater accessibility.

Deciding what kind of account you want to open allows you to better evaluate which financial institution to entrust your money to.

There are a multitude of different financial institutions for you to choose from currently. There are physical banks along with fully online banks, and each choice has pros and cons. It’s important to assess what features are important to you and which aren’t.

National banks are brick-and-mortar institutions, meaning that they have a physical location for you to visit. Their services are largely in-person, with some online banking capability and access to ATM services. There are usually monthly fees associated with accounts at national banks, along with low savings interest rates, and overdraft fees, but they are generally easily accessible. There are usually many locations nationwide, making these banks prominent in the financial industry.

Regional banks (also known as community or local banks) are also brick-and-mortar institutions that are typically focused on a region or community. These banks are usually known for their “relationship-based” banking, where the institution has a relationship with its customers. These banks are also known for being friendly towards small/local businesses in the area, providing loans and other services to the locals. Most of these banks are also community development financial institutions (CDFIs), which provide funds to low-income communities. These banks may lack the newest technology, but they provide ATM access and some mobile banking capability.

Credit unions are not-for-profit banks. These institutions are often community-focused or regional, with membership requirements to join the institution. These requirements could be living in a certain area, a business association, or just general demographics. Credit unions typically have high savings interest rates, resulting in a better return on your money. These institutions are run by the members rather than having profit-focused motivations. They also may lack the latest technology for mobile banking, as they mainly provide in-person services.

Online banks are exactly as they sound, a bank that provides full online services. They usually have high savings interest rates, since they are typically cheaper to maintain than a brick-and-mortar institution. There are low fees associated with accounts at online banks, but there are also some cons associated with banking completely online. These banks are often not “full-service”, meaning that they may only offer one type of account per bank, and they have no ATM access. There is also very little customer service, and the customer service that is available is often sub-par. Even so, these banks are incredibly convenient and accessible for a multitude of people.

At the end of the day, choosing a bank is an important financial decision that heavily relies on what your financial goals are. Each institution has different strengths and weaknesses, and it’s common for your financial needs to change throughout life. Shopping in the bank market can help you get a better deal for your money and better support for your financial journey.